New Jersey Passes Strongest Pay Equity Bill in the Nation

On Tuesday, April 24, 2018, New Jersey Governor Phil Murphy signed into law the strongest equal pay legislation in the nation. It strengthens the provisions of the existing New Jersey Law Against Discrimination (NJLAD) in order to more aggressively identify and combat unequal pay practices. Employers are now prohibited from paying “protected classes” such as women and minorities less than their workplace equals for performing “substantially similar work.”

Here’s what New Jersey employers need to know

Effective on July 1, 2018, it is an unlawful employment practice to discriminate in compensation (or in the financial terms or conditions of employment) based on race, creed, color, national origin, age, sex, and other classes protected by the NJLAD.

Pay disparities are in violation of the law. Employers must pay all employees performing “substantially similar work, when viewed as a composite of skill, effort, and responsibility” the same compensation, including benefits.

An employer may pay a different rate of compensation only if the employer demonstrates that the differential is made pursuant to a seniority system, a merit system, or the employer demonstrates:

• The differential is based on one or more legitimate, bona fide factors other than the characteristics of members of the protected class, such as training, education or experience, or the quantity or quality of production
• The factor or factors are not based on and do not perpetuate, a differential in compensation based on sex or any other characteristic of members of a protected class
• Each of the factors is applied reasonably
• One or more of the factors account for the entire wage differential; and
• The factors are job-related with respect to the position in question and based on legitimate business necessity.

Employers are prohibited from retaliating against employees for requesting from, discussing with, or disclosing equity pay information to a) another employee or former employee of the employer, b) a lawyer from which the employee seeks legal advice or c) any government agency.

An aggrieved employee may obtain relief for back pay for the entire period of time up to six years. Employees may be able to recover three times the monetary damages if a jury finds that an employer is guilty of an unlawful employment practice with the basis of pay, such as if:

• Employees were discriminated against on the basis of pay
• Employees were retaliated against for raising the issue of pay disparity to an employer or other employees
• Employees were required to waive their rights to complain about pay disparities

If a court determines that an employer’s behavior was willful, an employee may recover punitive damages. Each payment of unlawfully unequal wages or other compensation constitutes a separate offense. Employers are prohibited from lowering the wages of higher-paid employees in order to make salaried comparable.

Given the expansive scope of the new equal pay law, New Jersey employers should review their existing pay policies and practices to ensure that employees are being paid equally. Any inconsistencies should be remedied by July 1, when the law takes effect.